Global Oil Prices Crash & How will it Benefits Pakistan
The drop by oil prices within the global market would usher in positive developments for Pakistan economic indicators, alongside an extra reduction in POL rates and inflation control, said Special Assistant to the Prime Minister on Petroleum Nadeem Babar.
Talking to a private channel, Babar informed that Prime Minister Imran Khan has suggestions from various ministries, on how to capitalize on this ‘low price environment’. “We are very confident that the inflationary trend would decrease, which would be followed by a drop in the interest rate that will give us a significant economic boost,” he said. The advisor was of the view that this ‘artificially low price’ won’t add end of the day , so Pakistan must take its full advantage at the earliest and is in the process to implement a hedging strategy.
“Suppliers would also cut their production to strengthen price, whereas demand also will return into the market in few months,” he said. Babar said that his ministry is currently working on developing a comprehensive strategy over petroleum and forward it so that necessary procedure could be adopted for approval of the summary. “You can call it an insurance policy strategy, where we are looking into call option structures,” said Babar.
The advisor said that the present low prices would benefit Pakistan in its LNG purchase, and its purchase of other hydrocarbons that are linked thereto . He added that the consequences of current low oil prices would be evident after one month. The development comes after oil prices tanked to a historic drop after Saudi Arabia shocked the market by launching a price competition against Russia. Oil fell by almost 30pc on Monday, the foremost since 1991.
Brent crude futures fell by the maximum amount as $14.25, or 31.5pc, to $31.02 a barrel. That was the most important percentage drop since January 17, 1991, at the beginning of the primary Gulf War and therefore the lowest since Lincoln’s Birthday , 2016.Earlier, former Minister of Finance Salman Shah has also stated that the oil prices are expected to drop by Pakistan. He was of the view that the government is in a position to announce a big relief to the public next month.
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